Wednesday, December 14, 2011

The State of the PIIGS

Here's the one chart that explains the eurozone crisis. Market participants are requiring higher and higher interest rates to hold debt issued by the PIIGS. The higher interest rates make it more and more difficult for the PIIGS governments to bring their budgets under control.

The only sound solution is for the PIIGS to go bankrupt and stick the hurt on those who were willing to hold the PIIGS paper in the first place---mostly the banksters. Instead, the PIIGS, with the banksters in the shadows, are imposing austerity (read: higher taxes) which smothers the PIIGS economies even more. Thus, the European Central Bank will eventually step in to prop up the sovereign debt by money printing, which will result in huge price inflation in the EZ.